Ross Perot on Free Trade

1992 & 1996 Reform Party Nominee for President

Get other nations to lower import barriers

Tariffs are usually perceived as the major barrier to products moving from one nation to another. Where tariff barriers exist, the rates should be roughly equivalent. Where the rates are not equivalent, we should push for it.

While tariff barriers can
be significant impediments to free trade, non-tariff barriers can prove to be equally or more troublesome. For example, some of our Asian trading partners cause endless delays in approving US-made products. In some cases, they virtually ban our products.

Source: The Dollar Crisis, p.104-105
, Jul 2, 1996

Trade deficit is as bad as budget deficit

It is probably no coincidence that the beginning of the period of sustained trade deficits began in 1975-the same year that the budget deficits increased to a then-record high of $53 billion. By 1995, the accumulated trade deficit totaled approximately
$1.1 trillion. This number is analogous to our national debt of $4.9 trillion. Like the national debt, the accumulated trade deficit will have to be paid, either by a lower standard of living or increased productivity and sales.

Balancing the budget
will bring us closer to eliminating the trade deficit. [Some other things are]:

Trade deficit improves if we understand foreign culture

The Japanese, as do the British, drive on the left-hand side of the road. Therefore, for automobiles sold in Japan, the Japanese automakers build cars with the steering wheels on the right-hand side of the car. However, on automobiles bound for
the US, they place the steering wheel on the left-hand side. It would seem that US automakers would reciprocate by building automobiles with right-hand steering for Japanese and British markets. But they don’t!

And we handicap ourselves by persisting
in using the English units of measure for most of our manufacturing processes, when almost every other industrialized nation has adopted the metric system.

Consider, too, that in many nations, people are accustomed to buying food products
in smaller packages and quantities than we use. Sellers must learn to adapt to different markets. We must become more understanding of the cultures and buying habits of others.

Lost NAFTA debate with Al Gore

On Nov. 9, 1993, Perot and Al Gore squared off [in the debate on NAFTA], in what was to be the most watched show in cable TV history. Gore took command early, accusing Perot of opposing the trade deal because he stood to profit personally (from the
family’s Alliance Airport), and challenged him to open the books on his financing of the anti-NAFTA campaign. The attacks threw Perot off stride and provoked increasingly tart responses. “You’re lying now,” Perot snapped at Gore. At another point, he
accused the vice-president of using “phony numbers.”

A Gallup poll taken a week after the debate showed Perot’s favorable ratings plummeted from 66% to 29%. NAFTA passed the House, and Clinton signed the agreement by year’s end.

Perot has developed
a theory for why Gore may have done so well: “If you want the ultimate education on the NAFTA debate, watch it again, and watch Al Gore’s ear. And there is something glistening in his ear,” [i.e., a radio to get assistance from off-stage].

Keep jobs in US instead of giant sucking sound toward Mexico

As this book went to press, Congress was hearing testimony concerning NAFTA. If this agreement is signed as it is currently drafted, the next thing you will hear will be a giant sucking sound as the remainder of our manufacturing jobs--
what’s left after the two million that went to Asia in the 1980s--get pulled across our southern border.

We need jobs here, and we must manufacture here if we wish to remain a superpower.
We must stop shipping manufacturing jobs overseas and once again make the words “Made in the USA” the world’s standard of excellence.

We can do it. The question is--will we? It’s up to us, the owners of this country--THE PEOPLE.

Mexicans are good; NAFTA is not

Mexico is our neighbor, its people are good, and we want them to prosper. But NAFTA is not the way. The present deal must be scrapped and negotiators put to work to develop a long-term economic relationship between Mexico, Canada, and the US that is in
our mutual interest.

If the administration pursues its plan to have NAFTA in place by the end of 1993, then American voters must take action. If they agree that NAFTA should be rejected, they must contact their representatives and stop it.

Fast Track makes more secrecy and less public input

The 1991 “fast track” legislation gave Pres. Bush the authority to negotiate NAFTA in complete secrecy and without the participation of either Congress or the US public. The term “fast track” refers to a process whereby Congress turns over to the
President its authority to regulate foreign commerce-a power granted to Congress in the Constitution.

“Fast track” did not allow a Senate filibuster. For the Senate to forgo its right to filibuster is unusual. Since 1960, the Senate has approved or
ratified 25 treaties, conventions, and agreements-including nuclear nonproliferation treaties-all without “fast track.”

Now. Pres. Clinton gets to decide if or when to submit NAFTA to Congress. The irony is that the many new members of Congress elected
in 1992 who opposed NAFTA are still bound by the limited-debate, no-filibuster, up-or-down vote restrictions imposed by the “fast track” legislation in 1991. Of course, that is why the NAFA advocates wanted “fast track.”

NAFTA is good for investors & bad for jobs

NAFTA is really less about trade than it is about investment. Its principal goal is to protect US companies and investors operating in Mexico. The text of the agreement is contained in two volumes covering more than 1,100 pages.
The text is mind-numbingly dull. Large portions of it are written in the type of obscure legal terms found on the back of an insurance policy. Buried in the fine print are provisions that will give away American jobs and radically reduce the sovereignty
of the US.

Ultimately, NAFTA is not a trade agreement but an investment agreement. NAFTA’s principal goal is to protect the investment of US companies that build factories in Mexico.
This is accomplished by reducing the risk of nationalization, by permitting the return of profits to US businesses, and by allowing unlimited access to the American markets for goods produced in Mexico.

NAFTA’s main beneficiary: 36 people who own half of Mexico

[When the Mexican media announced NAFTA, they] did not identify the tiny handful of people in Mexico who would gain the most from this trade pact. They are the 36 businessmen who own Mexico’s 39 largest conglomerates.
Collectively, their companies control 54% of Mexico’s Gross National Product. These companies dominate virtually every sector of the Mexican economy of any consequence. When the Mexican government sold off big chunks of Mexico’s state-run companies
in the late 1980s and early 1990s, this tiny handful of people quickly acquired control.

In 1993, President Salinas hosted a private dinner for 29 of these Mexican elite. He asked the businessmen to each make a
$25 million political contribution to his party, the PRI. All said that they would contribute. For these men, it would be money well invested because NAFTA would guarantee the advantages that President Salinas had gained for them.

NAFTA will cause a giant sucking sound as jobs go south

A Giant Sucking Sound: One million Mexicans enter the work force each year. They need jobs. To get those jobs, President Salinas and his government have deliberately kept wages down to attract foreign investment. Mexico has vastly expanded its
vocational training programs to improve worker skill levels. The Mexican government also offers low-cost loans and tax benefits to companies that build factories in Mexico.

Mexico’s national development strategy is reminiscent of strategies
used by Japan, Korea, and Taiwan a generation ago. Like the strategies used by those countries, Mexico’s strategy depends on taking jobs from the US.

The New York Times reports that the skills of Mexican workers already match the skills of
70% of the labor force in the US. Once properly trained, Mexican workers’ productivity and work quality equals that of anyone, anywhere in the world.

Mexico keeps its wages low to attract foreign investment. This strategy has worked.

Maquiladoras just steal jobs; it’s not really “trade”

To encourage US companies to operate in Mexico, the US government subsidizes companies in Mexico that ship products to the US by removing import fees. These factories are known as “maquiladoras.”

US multinationals created almost as many new
manufacturing jobs in Mexico under the Maquiladora Program between 1986 and 1990 as they created in the US-92,000 jobs versus 97,000 jobs. Most of the goods produced in the maquiladoras are shipped into the US market. Consequently, most of the so-called
trade between the US and Mexico is not trade as trade is commonly understood. Rather, it is primarily US companies shipping their own machinery, components, and raw materials across the border into their Mexican factories and then shipping their finished
or semi-finished goods back over the border into the US.

Altogether, more than half of the US “exports” to Mexico never entered Mexico’s domestic market-[actual trade was] less than $8 billion of the $41 billion of US exports [claimed] in 1992.

Long-term US trade strategy: focus on debt & jobs

Any trade deals with Mexico, or any other nation, must be considered in the context of how they fit into the long-term US trade strategy, reflecting these realities:

The Cold War is over

The US does not have enough good jobs

The US is
$4 trillion dollars in debt and must not do anything to damage its tax base

Every other nation plays by a different set of rules.

The questions, therefore, are: how does the US expand trade with other nations in a way that neither punishes the
other nations for their successes nor destroys jobs or industries in America? How do individual agreement, such as a new NAFTA, fit into the overall US trade strategy? And most important, how can trade be used to create more and better jobs in the US?

As a nation, the danger of failing to think strategically about trade is measured by the fact that the US trade deficit in 1993 will be close to $100 billion. A trade deficit of this magnitude means a loss of 1.9 to 2 million US jobs.

NAFTA means a giant sucking sound as jobs are lost

PEROT: You implement NAFTA, the Mexican trade agreement, where they pay a dollar an hour, have no health care, no retirement, no pollution controls, etc., and you're going to hear a giant sucking sound of jobs being pulled out of this country.
We don't have good trade agreements across the world.

BUSH: I am for the North American Free Trade Agreement. I think free trade is going to expand our job opportunity. I think it is exports that have saved us when we're in a recession.
We need more free trade agreements.

CLINTON: I say it does more good than harm if we can get protection for the environment so that the
Mexicans have to follow their own environmental standards, their own labor law standards, and if we have a genuine commitment to reeducate and retrain American workers who lose their jobs.

Bad trade deals come from Washington insiders cashing in

Q. [to PEROT]: What will you do as President to open foreign markets to fair competition from American business and to stop unfair competition so that we can bring jobs back to the US?

PEROT: That's right at the top of my agenda. We've shipped
millions of jobs overseas, and we have a strange situation because we have a process in Washington where after you've served for a while, you cash in, become a foreign lobbyist, make $30,000 a month, then take a leave, work on Presidential campaigns,
make sure you got good contacts, and then go back out. We have got to stop sending jobs overseas. To those of you in the audience who are business people, pretty simple: If you're paying $12, $13, $14 an hour for factory workers, and you can move your
factory south of the border, pay $1 an hour for labor. There will be a giant sucking sound going south. So if the people send me to Washington, the first thing I'll do is study that 2,000-page agreement and make sure it's a two-way street.

NAFTA allows prison-made Chinese textiles into US via Mexico

The US apparel market is further opened under NAFTA to producers operating out of Mexico. An exception is that a substantial portion of the apparel made in Mexican factories must use fabric manufactured in North America. The intent is to protect US and
Canadian textile jobs. However, Chinese and other foreign textile makers have already figured a way around this provision by building their own factories in Mexico.

NAFTA establishes rules that deny preferential treatment for goods produced
outside of North America. The way for a Japanese or European company to get preferential treatment, of course, is to build a factory in Mexico. US textile makers who want to be competitive will be forced to move jobs to Mexico or go out of business.

Assume the US could put enough customs agents along the border to inspect every item exported from Mexico to the US. Are those customs agents going to be able to tell the difference between a shirt made by prison labor in China and a shirt made in Mexico